EXHIBIT 10.8
AMENDED AND RESTATED OPTION AGREEMENT
THIS AMENDED AND RESTATED OPTION AGREEMENT (this "AGREEMENT"), dated
as of July 31, 1995, is between Career Education Corporation, a Delaware
corporation ("CEC"), and Xxxx X. Xxxxxx ("XXXXXX").
RECITALS
X. Xxxxxx and CEC are parties to that certain Xxxxxx Option
Agreement, dated as of January 31, 1994 (the "ORIGINAL AGREEMENT") pursuant to
which Xxxxxx was granted options to purchase certain shares of CEC's common
stock, $.01 par value based upon the returns achieved by Xxxxxx Equity Capital
Corporation ("HECC"), on its behalf and as successor to Xxxxxx Financial, Inc.
B. In connection with the extension of Xxxxxx'x Employment
Agreement, Xxxxxx and CEC have decided to restructure a portion of Xxxxxx'x
rights to receive the options, as reflected in this Agreement and the
Supplemental Option Agreement of even date herewith between Xxxxxx and CEC.
AGREEMENTS
In consideration of the recitals and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 In addition to the terms defined elsewhere in this Agreement,
as used in this Agreement:
(a) "Adjusted Shares" means the number of shares of CEC
Common (assuming full exercise of all Option Shares) at the time
of the exercise of the Option, exclusive of (i) any shares of CEC
Common issued or issuable pursuant to the Supplemental Option or
the Xxxxxxx Option; (ii) any shares of CEC Common issued to the
management of CEC pursuant to any stock option plans duly adopted
by the Board of Directors from time to time; and (iii) any shares
of CEC Common sold at a price equal to the market value of such
shares (as reasonably determined by the Board of Directors of
CEC) to any Person who is not affiliated with any of the
Existing Stockholders. For purposes hereof, if CEC issues any
Option Securities or CEC Common in connection with the issuance
of any shares of preferred stock of CEC (or any other capital
stock with a preference as to dividends or liquidation), such
Option Securities and any CEC Common issuable upon the exercise,
exchange or conversion thereof shall be deemed to have been
issued at market value (regardless of the stated exercise,
exchange or purchase price of such CEC Common) if the Board of
Directors reasonably determines that the total price paid for all
such equity securities (including the Option Securities,
preferred stock and CEC Common) equals the market value of the
portion of total capitalization represented by all such equity
securities. It is hereby acknowledged that all CEC Common
issuable in connection with the Warrant (along with any Penalty
Warrants issued from time to time) issued to Electra Investment
Trust PLC and Electra Associates, Inc. (collectively, "ELECTRA")
or their respective successors or assigns pursuant to the
Securities Purchase Agreement of even date herewith among CEC and
Electra constitute shares of CEC Common issued at market value
for purposes of this Agreement.
(b) "Cash Equivalent" means (a) marketable direct
obligations issued or unconditionally guarantied by the United
States Government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case
maturing within ninety (90) days from the date of acquisition
thereof; (b) commercial paper maturing no more than ninety (90)
days from the date issued and, at the time of acquisition, having
a rating of at least A-1 from Standard & Poor's Corporation or at
least P-1 from Xxxxx'x Investors Service, Inc.; and (c)
certificates of deposit or bankers' acceptances maturing within
ninety (90) days from the date of issuance thereof issued by, or
overnight reverse repur chase agreements from, any commercial
bank organized under the laws of the United States or any state
thereof or the District of Columbia having combined capital and
surplus of not less than $500,000,000 and not subject to setoff
rights in favor of such bank.
(c) "Cause" has the meaning set forth in the Xxxxxx
Employment Agreement.
(d) "CEC Common" means the common stock of CEC, $.01 par
value, regardless of class, and any securities (including,
without limitation, options and warrants) which are exercisable
or exchangeable for or convertible into CEC Common (an "OPTION
SECURITY"); provided, that for purposes of calculating the Option
Amount hereunder, the CEC Common issuable upon exercise, exchange
or conversion of any Option Security shall, upon its issuance, be
deemed to have been sold to the holder of the Option Security as
of the date of the issuance of the Option Security for an amount
equal to the exercise, exchange or conversion price provided in
such Option Security plus the consideration received by CEC upon
the issuance of the Option Security (as reasonably determined by
the Board of Directors of CEC in connection with the issuance of
such Option Securities).
(e) "Commission" means the Securities and Exchange
Commission.
(f) "Dilution Factor" means a fraction, the numerator of
which is the number of shares of CEC Common outstanding at the
time of such determination plus the then exercisable portion of
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the Option Amount pursuant to the Option and the Xxxxxxx Option,
and the denominator of which is the number of shares of CEC
Common outstanding at the time of such determination.
(g) "Xxxxxxx Option" means the option granted to Xxxxxxx
pursuant to the Amended and Restated Xxxxxxx Option Agreement, of
even date herewith, between CEC and Xxxxxxx.
(h) "Earn-Up Target" means, at the time of determination,
an amount of cash or cash equivalents that HECC and its
affiliates would have to receive in connection with the sale,
transfer, redemption, repayment, or other disposition of all or
part of the Xxxxxx Investment (net of related transaction
expenses including fees and expenses of counsel) or any cash
dividend or interest declared and paid thereon in order for HECC
and their respective affiliates (including, without limitation,
all consulting, non-competition, advisory or similar fees
received by HECC and its affiliates) to (i) earn, in the
aggregate with respect to the Xxxxxx Investment, an IRR of at
least the amount specified with respect to such Earn-Up Target
and (ii) receive aggregate cash or cash equivalent consideration
of at least twice the total amount of Xxxxxx Investment. All Earn-
Up Targets shall be calculated on a pro forma basis assuming that
all shares of CEC Common subject to the Supplemental Option and
all shares of CEC Common subject to the Supplemental Option and
all shares of CEC Common subject to the Option and the Xxxxxxx
Option that would become exercisable upon achievement of such
Earn-Up Target have been exercised and such shares were issued
and outstanding prior to
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the transaction or payment with respect to which achievement of
the Earn-Up Target is being calculated. The Earn-Up Targets shall
be based on the achievement of the IRR identified below:
Earn-Up Target IRR
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Initial Earn-Up Target 25%
Second Earn-Up Target 30%
Third Earn-Up Target 35%
Fourth Earn-Up Target 40%
Final Earn-Up Target 45%
(i) "Exercise Percentage" means the percentage of the
Option Amount with respect to which the Option is exercisable
based upon the achievement of the Earn-Up Targets as determined
in accordance with the following:
Percentage
of Option Amount
Earn-Up Target then Exercisable
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Initial Earn-Up Target 28.6%
Second Earn-Up Target 42.9%
Third Earn-Up Target 57.1%
Fourth Earn-Up Target 78.6%
Final Earn-Up Target 100%
(j) "Exercise Price" means $.10 per share (adjusted
proportionately in the event the CEC Common is combined into a
lesser number or divided into a greater number but in no event
less than the par value of such CEC Common).
(k) "Existing Stockholders" means Xxxxxx, Xxxxxxx and HECC
and each of their respective successors and permitted assigns.
(l) "Good Reason" has the meaning set forth in the Xxxxxx
Employment Agreement.
(m) "Xxxxxx Investment" means any and all equity and debt
investments in CEC or its subsidiaries made by HECC or any of its
affiliates on or prior the exercise of an Option.
(n) "IRR" means the annual rate of interest that causes (i)
the net present value as of January 31, 1994 of all cash or cash
equivalent payments received by HECC and its affiliates on or
prior to the date of any calculation hereof with respect to the
Xxxxxx Investment (whether such payments are received from CEC
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or any third party, and whether such payments are received as
principal, interest, dividends, sale proceeds, upon redemption of
any portion of the Xxxxxx Investment, upon liquidation of CEC or
otherwise including, without limitation, all consulting, non-
competition, advisory or similar fees received by HECC and its
affiliates), to equal (ii) the sum of (A) $3,000,000 plus (B) the
----
net present value (calculated using an interest rate equal to the
IRR) as of January 31, 1994 of each additional cash payment made,
directly or indirectly, subsequent to January 31, 1994 by HECC or
its affiliates to CEC or to others to acquire additional debt or
equity securities of CEC as part of the Xxxxxx Investment. The
IRR shall be calculated on a pre-tax basis.
(o) "Xxxxxx Employment Agreement" means the Employment and
Non-Competition Agreement, dated as of January 31, 1994, between
Xxxxxx and CEC, as amended as of July 31, 1994.
(p) "Non-Earn-Up Sale" means the consummation of the sale,
transfer or other disposition by HECC and its affiliates of all
or the last portion of the Xxxxxx Investment in one or more arm's-
length transactions to independent third parties resulting in the
receipt by HECC and its affiliates of cash in an amount which
when aggregated with all prior cash dispositions by HECC or its
affiliates of the Xxxxxx Investment, all cash dividends and
interest declared and paid in respect thereof and all consulting,
non-competition, advisory or similar fees received by HECC and
its affiliates is less than the Initial Earn-Up Target.
(q) "Option" has the meaning set forth in Section 2.1 hereof.
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(r) "Option Amount" means the number of shares of CEC
Common equal to 7.0% of the Adjusted Shares as reduced by the
number of shares of CEC Common previously issued pursuant to the
Option.
(s) "Option Termination Date" means the earliest of (i)
January 31, 2004, (ii) the date of the closing of a Non-Earn-Up
Sale, (iii) the date Xxxxxx ceases to be employed by CEC
resulting from Xxxxxx'x voluntary decision to terminate his
employment (other than for Good Reason) or a termination of
Xxxxxx'x employment with CEC for Cause, (iv) the date of any
material violation by Xxxxxx of any provision of Section 5 of the
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Xxxxxx Employment Agreement following the termination of his
employment with CEC and (v) twenty-
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four (24) months after the date Xxxxxx and his Permitted
Transferees cease to be stockholders of CEC.
(t) "Permitted Transferee" has the meaning set forth in
Section 2.6 of the Stockholders' Agreement.
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(u) "Person" means a natural person, a partnership, a
corporation, an association, a joint stock company, a trust, an
estate, a joint venture, an unincorporated organization or other
entity or a governmental entity or any department, agency or
political subdivision thereof.
(v) "Securities Act" means the Securities Act of 1933, as
amended.
(v) "Supplemental Option" means the option granted to
Xxxxxx pursuant to the Supplemental Option Agreement of even date
herewith between CEC and Xxxxxx.
(w) "Vested Percentage" means the percentage identified
below as determined by the number of years from January 31, 1994
that Xxxxxx is a director of CEC or is employed as an executive
officer of CEC (pursuant to the Xxxxxx Employment Agreement or
otherwise), plus any additional period during which Xxxxxx
continues to receive his Base Salary pursuant to Section 5.1 of
the Xxxxxx Employment Agreement, as determined below:
Years of Employment Vested Percentage
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After January 31, 1995 25%
After January 31, 1996 50%
After January 31, 1997 75%
After January 31, 1998 100%
Notwithstanding the foregoing, if Xxxxxx ceases to be an executive officer
of CEC as the direct result of (i) the consummation of a transaction
described in Section 2.4(c) of the Stockholders' Agreement prior to the
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fourth anniversary hereof or (ii) any person other than Xxxxxxx, Xxxxxx or
Xxxxxx acquiring a majority of the CEC Common and exercising the power to
elect a majority of CEC's Board of Directors, the Vested Percentage shall
be 100%.
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ARTICLE II
THE OPTION PROVISIONS
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2.1 Grant of the Option. Subject to the terms and conditions set
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forth herein, CEC hereby grants to Xxxxxx an option (the "OPTION") to purchase
CEC Common from CEC at a price, per share, equal to the Exercise Price. The
Option shall be exercisable with respect to the Option Amount applicable to the
achievement of the corresponding Earn-Up Target.
2.2 Procedures for Exercise. Subject to the Option becoming
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exercisable pursuant to Section 2.3 of this Agreement, Xxxxxx or a Permitted
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Transferee may exercise the Exercise Percentage of the Option Amount (in whole
or in part) at any time thereafter and prior to the Option Termination Date by
delivering written notice to CEC setting forth the portion of the Option (not to
exceed the Exercise Percentage of the Option Amount) to be exercised, together
with cash (or a bank check payable to the order of CEC or its designee) in an
amount equal to the aggregate Exercise Price for the shares of CEC Common with
respect to which Xxxxxx or a Permitted Transferee is exercising such Option. The
shares subject to the Option shall be shares of such class or classes of the CEC
Common as CEC shall determine. As promptly as practicable after receiving such
written notice and payment, CEC shall deliver to Xxxxxx or a Permitted
Transferee, as the case may be, certificates for the shares of CEC Common with
respect to which Xxxxxx or a Permitted Transferee has exercised the Option. For
all purposes, Xxxxxx or a Permitted Transferee, as the case may be, will be
deemed to have exercised the Option and to have purchased and become the holder
of the applicable CEC Common as of the date CEC receives written notice and
payment from Xxxxxx or a Permitted Transferee, as the case may be, as provided
in this Section 2.2.
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2.3 Conditions to Exercise of the Options. The Option shall only
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become exercisable as follows:
(a) The Option will become exercisable with respect to the
Exercise Percentage of the Option Amount on or after the first
date on which HECC and/or its affiliates receive an amount of
cash or cash equivalents necessary to achieve the Earn-Up Target
applicable to such Exercise Percentage.
(b) At the time of the exercise of the Option, Xxxxxx
shall be entitled to exercise the Option with respect to a number
of shares of CEC Common equal to the Exercise Percentage of the
Option Amount applicable to the achievement of such Earn-Up
Target, less the number of shares of CEC Common previously
----
purchased
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pursuant to the Option.
(c) If at the time of the exercise of the Option, Xxxxxx
is not employed as an executive officer of CEC, Xxxxxx shall only
be entitled to exercise the Option with respect to the Vested
Percentage of the Exercise Percentage of the CEC Common,
determined as of the date Xxxxxx ceased to be so employed,
otherwise subject to the Option in accordance herewith.
2.4 Payments in Lieu of Exercise of Option. If at the time the
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Option or any portion thereof is exercised neither Xxxxxx nor his Permitted
Transferees are stockholders of CEC, CEC shall have the right, but not the
obligation, to pay Xxxxxx or his Permitted Transferees the cash or cash
equivalent consideration attributable to the CEC Common that Xxxxxx would have
otherwise been entitled to purchase pursuant to Section 2.3 above. To the extent
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that Xxxxxx or his Permitted Transferees are to receive cash or cash equivalent
consideration pursuant to this Section 2.4 in lieu of the issuance of shares of
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CEC Common, CEC shall transfer to Xxxxxx an aggregate amount of cash or cash
equivalent consideration equal to the value of the CEC Common that Xxxxxx would
have been entitled to purchase pursuant to such exercised Options. The per share
value of the CEC Common referred to in the preceding sentence shall be equal (a)
to (i) the sum of the cash or cash equivalent consideration received by HECC and
its affiliates in any transaction or redemption resulting in the achievement of
an Earn-Up Target attributable to the CEC Common sold by such parties, divided
by (ii) the aggregate number of shares of CEC Common to be sold by such parties
or redeemed by CEC in such transaction multiplied by the Dilution Factor; or (b)
if no shares of CEC Common were sold or redeemed in connection with the
achievement of such Earn-Up Target, the Fair Market Value of such shares, as
determined in accordance with the Stockholders' Agreement.
2.5 Notice of Internal Rate of Return. After each sale, transfer,
---------------------------------
redemption or other disposition of any portion of the Xxxxxx Investment, the
receipt of any cash dividend or interest thereon or the payment of any
consulting, non-competition, advisory or similar fees received by HECC and its
affiliates, the Compensation Committee of the Board of Directors of CEC (with
the assistance of HECC) will, if requested by Xxxxxx in writing, deliver within
seven (7) days of Xxxxxx'x request written notice to Xxxxxx of the IRR after
giving effect to such transaction in order to determine whether an Earn-Up
Target has been met. If one or more Earn-Up Targets have been achieved, such
notice shall also contain a calculation of the Exercise Percentage of the Option
Amount and the number of shares of CEC Common which Xxxxxx is then entitled to
purchase upon exercise of the Option.
2.6 Termination of the Options. Notwithstanding
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anything else to the contrary in this Agreement, the Options will expire and
terminate immediately upon the Option Termination Date and thereafter will be
void and of no force and effect.
2.7 Non-Transferable. Xxxxxx or any Permitted Trans feree will not
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transfer, sell, convey, exchange or otherwise dispose of (herein referred to as
"DISPOSITION" or "TO DISPOSE OF") the Options and the rights and privileges of
Xxxxxx or such Permitted Transferee under this Agreement, except (i) in the
event of Xxxxxx'x death or incompetency, to a Permitted Transferee who consents
in writing to be bound by the terms of this Agreement to the same extent as
Xxxxxx or (ii) by exercise pursuant to the terms of this Agreement.
2.8 No Rights as a Stockholder. The Options do not confer upon
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Xxxxxx or a Permitted Transferee any right to vote or consent or to receive
notice as a stockholder of CEC that do not otherwise exist in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise of the Options as hereinbefore provided.
ARTICLE III
MISCELLANEOUS
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3.1 Notices. All notices, demands or other communications to be
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given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier service
(charges prepaid), sent by facsimile or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Company and to Xxxxxx at
the addresses indicated below:
If to CEC:
Career Education Corporation
0000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With copies to:
Xxxxxx Equity Capital Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
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Xxxxxx International Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
and
Goldberg, Kohn, Bell, Black,
Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Xxxxxx:
Xxxx X. Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000
With copies to:
Xxxxx, Xxxxx & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
3.2 Entire Agreement. Except as otherwise expressly set forth
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herein, this Agreement and the other agreements executed in connection here
embody the complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the subject matter
hereof in any way, including, without limitation, the Original Agreement.
3.3 Successors and Assigns. All covenants and agree ments contained
----------------------
in this Agreement by or on behalf of either party hereto shall bind and inure to
the benefit of the other party hereto and their heirs, legal representatives,
successors and assigns whether so expressed or not.
3.4 Governing Law. This Agreement shall be construed and enforced
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in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this
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Agreement shall be governed by the laws of the State of Illinois without giving
effect to the provisions thereof regarding conflict of laws.
3.5 Consent to Jurisdiction and Service of Process. EACH PARTY
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HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT SUBJECT
TO CEC'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER RELATED DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH
PARTY HERETO ACCEPTS FOR ITSELF AND HIMSELF, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. XXXXXX DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM AND SUCH OTHER PERSONS AS MAY HEREINAFTER BE
SELECTED BY CEC WHO IRREVOCABLY AGREE IN WRITING TO SO SERVE AS AGENT TO RECEIVE
ON SUCH PARTY'S BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY
SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH PARTY TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL
BE MAILED BY REGISTERED MAIL TO EACH PARTY AS PROVIDED HEREIN, EXCEPT THAT
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL
NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY A PARTY
REFUSES TO ACCEPT SERVICE, SUCH PARTY HEREBY AGREES THAT SERVICE UPON IT BY MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
CEC TO BRING PROCEEDINGS AGAINST XXXXXX IN ANY OTHER COURT HAVING JURISDICTION
OVER XXXXXX.
3.6 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS
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RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED. EACH PARTY HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS OR HIS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. THIS WAIVER IS
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IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
3.7 Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
3.8 Counterparts. This Agreement may be executed simultaneously in
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two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
3.9 Amendments and Waivers. No modification, amendment or waiver of
----------------------
any provisions of this Agreement shall be effective unless approved in writing
by each of the parties hereto. The failure of any party at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and will not affect the right of such party to enforce each
and every provision hereof in accordance with its terms.
3.10 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
3.11 Xxxxxx'x Investment Representations. Xxxxxx hereby represents
-----------------------------------
on the date hereof, and any person that acquires all or any portion of the
Options in accordance with the provisions of this Agreement represents with
respect to such person as of the date of such acquisition, that such person is
acquiring the Options for such person's own account with the present intention
of holding the Options and any shares of common stock of CEC acquired pursuant
to the Options for purposes of investment, and that such person has no intention
of selling either the Options or any shares of common stock of CEC acquired
pursuant to the Options in a public distribution in violation of the federal
securities laws or any applicable state securities laws. Xxxxxx hereby
represents on the date hereof, and any person that acquires all or any portion
of the Options in accordance with the provisions of this Agreement represents
with respect to such person as of the date of exercise, that such person (a) has
such knowledge and experience in financial and business matters that
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such person is capable of evaluating the merits and risks of such person's
investment in the Options and any shares of common stock of CEC acquired
pursuant to the Options; (b) is able to bear the complete loss of his investment
in the Options and any shares of common stock of CEC acquired pursuant to the
Options; (c) has had the opportunity to ask questions of, and receive answers
from, CEC concerning the terms and conditions of the Options and the common
stock of CEC and to obtain additional information about CEC; (d) is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
by the Commission under the Securities Act; and (e) understands that no
assurances can be given that CEC's business plan, as currently proposed or
subsequently modified, will be effectuated and that none of HECC, HFI or their
respective affiliates has any commitment or obligation to provide additional
equity or debt financing, or other financial accommodations, to CEC or its
subsidiaries to effectuate such business plan or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CAREER EDUCATION CORPORATION
By /s/ Xxxx X. Xxxxxx
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Its President
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XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
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AMENDMENT TO
AMENDED AND RESTATED OPTION AGREEMENT
THIS AMENDMENT (the "Amendment"), dated as of October 20, 1997, is made by
and between Career Education Corporation, a Delaware corporation ("CEC"), and
Xxxx X. Xxxxxx ("Xxxxxx") and amends that certain Amended and Restated Option
Agreement (the "Option Agreement") dated as of July 31, 1995, between CEC and
Xxxxxx.
WHEREAS, pursuant to the Option Agreement, CEC granted Xxxxxx an option
(the "Option") to purchase a number of shares of CEC common stock equal to 7.0%
of the CEC common stock, $.01 par value, at the time of the exercise of the
Option (assuming full exercise of all outstanding warrants, options and
convertible securities), adjusted as set forth in the Option Agreement; and
WHEREAS, CEC is pursuing an initial public offering of its common stock
pursuant to a Registration Statement on Form S-1, Registration No. 333-37601
(the "Offering"), and in contemplation of the Offering, Xxxxxx and CEC have
agreed to amend certain terms and conditions of the Option Agreement.
NOW, THEREFORE, pursuant to Section 3.9 of the Option Agreement, CEC and
Xxxxxx agree as follows:
1. Paragraph(s) of Section 1.1 of the Option Agreement is hereby amended
by adding the following sentence at the end of such Paragraph:
Notwithstanding the foregoing, after the closing (the "IPO Closing") of the
initial public offering by CEC of the CEC Common (the "Offering"), "Option
Termination Date" shall mean January 31, 2004.
2. Section 2.1 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:
Notwithstanding the foregoing, at any time after the IPO Closing, the
Option shall be exercisable with respect to 7,960.2 shares of CEC Common,
subject to adjustment from time to time as provided in this Article II.
3. Section 2.3 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:
Notwithstanding the foregoing, the Option will become exercisable in full
(fully vested) upon the IPO Closing, and at the time of any exercise of the
Option, Xxxxxx shall be entitled to exercise the Option with respect to a
number of shares of CEC Common equal to 7,960.2 (subject to adjustment as
provided in this Article II) less the number of shares previously purchased
pursuant to the Option,
whether or not Xxxxxx is employed as an executive officer of CEC at such
exercise time.
4. Section 2.4 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:
Notwithstanding the foregoing, at any time after the IPO Closing, the per
share value of CEC Common referred to in this Section 2.4 shall be equal to
the closing (last sale) price per share of CEC Common, as reported on the
Nasdaq National Market (or, if other than the Nasdaq National Market, the
principal market or exchange on which CEC Common is then traded) for the
most recent day on which CEC Common is traded prior to the date on which
CEC receives written notice of, and payment for, exercise of the Option
pursuant to Section 2.2 of this Agreement.
5. The Option Agreement is hereby amended by adding the following Section
2.9:
2.9 Subdivision or Combination of CEC Common. If CEC at any time
(whether prior to or after the IPO Closing) subdivides (by any stock split,
stock dividend, recapitalization or otherwise), the outstanding shares of
CEC Common into a greater number of shares, the number of shares of CEC
Common obtainable upon exercise of the Option will be proportionately
increased. If CEC at any time (whether prior to or after the IPO Closing)
combines (by combination, reverse stock split or otherwise) the outstanding
shares of CEC Common into a smaller number of shares, the number of shares
of CEC Common obtainable upon exercise of the Option will be
proportionately decreased.
6. The Option Agreement is hereby amended by adding the following Section
2.10:
2.10 Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of CEC's assets to another person
or entity, or other transaction which is effected in such a way that
holders of CEC Common are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for CEC Common is referred to herein as "Organic Change." Prior to
the consummation of any Organic Change, CEC will make appropriate provision
(in form and substance reasonably satisfactory to Xxxxxx) to insure that
Xxxxxx will thereafter, upon the basis and the terms and in the manner
provided in this Agreement, have the right to acquire and receive in lieu
of or addition to (as the case may be) the shares of CEC Common immediately
theretofore acquirable and receivable upon the exercise of the Option, such
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of CEC Common
immediately theretofore acquirable and receivable upon the exercise of the
Option Agreement
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had such Organic Change not taken place. CEC will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than CEC) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument
(in form and substance reasonably satisfactory to Xxxxxx) the obligation to
deliver to Xxxxxx such shares of stock, securities or assets as, in
accordance with the foregoing provisions, Xxxxxx may be entitled to
acquire.
7. Section 3.1 of the Option Agreement is hereby amended to read in its
entirety as follows:
Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be
in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier
service (charges prepaid), sent by facsimile or mailed to the recipient by
certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to CEC and to
Xxxxxx at the addresses indicated below:
If to CEC:
Career Education Corporation
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With copies to:
Xxxxxx Equity Capital Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Xxxxxx International Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
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Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and
Goldberg, Kohn, Bell, Black, Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Xxxxxx:
Xxxx X. Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000
With copies to:
Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
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IN WITNESS WHEREOF, CEC and Xxxxxx have executed this Amendment as of
October 20, 1997.
CAREER EDUCATION CORPORATION
By: /s/ W. A. Xxxxxxx /s/ Xxxx X. Xxxxxx
----------------------- ------------------
Xxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxxx
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Title: Sr. VP & CFO
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